Insilco Corporation Reports Second Quarter Results
24 July 1998
Insilco Corporation Reports Second Quarter Results
COLUMBUS, Ohio, July 23 -- Insilco Corporation
today reported net income of $4.4 million, or $1.02 per diluted share, for its
second quarter ended June 30, 1998, compared to $11.2 million, or $1.14 per
diluted share, for the 1997 second quarter. Sales for the 1998 second quarter
were $170.0 million, compared to $169.7 million recorded in the year ago
second quarter.
The 1998 second quarter results included expenses of $1.3 million related
to the previously announced merger between Insilco and an affiliate of DLJ
Merchant Banking. The Company also reported a significant increase in its
effective tax rate for the quarter, to 53% versus 38% in the 1997 second
quarter, resulting from the fact that certain expenses to be incurred in
connection with the pending merger will not be deductible for tax purposes.
For the six months ended June 30, 1998, the Company reported income from
continuing operations of $7.2 million, or $1.69 per diluted share, compared to
$15.6 million, or $1.58 per diluted share, for the six months ended June 30,
1997. Sales were $287.3 million for the first six months of 1998, compared to
$276.2 million recorded in the first six months of 1997.
CEO COMMENTS
"Our core automotive heat exchanger businesses posted solid results for
the second quarter," said Insilco Chairman and CEO, Robert L. Smialek. "Sales
at our German heat exchanger tubing unit were also up quite sharply in the
quarter. However, earnings growth for the Group was held back by weak sales
at the Company's heat exchanger equipment unit which in recent years has had a
significant portion of its sales in developing countries in Asia. In
addition, performance for our Automotive Components Group was affected by the
seasonal shutdown of a major automotive OEM, which occurred a week earlier
than last year and, due to this timing difference, reduced our second quarter
sales. The General Motors strike had only a marginal impact on the Group in
the quarter. A prolonged strike will impact Thermalex, our unconsolidated
joint venture, which generates a substantial portion of its revenue from GM.
"Our technologies businesses were impacted in the second quarter by the
general slowdown in electronics components markets. This is compared to a
very strong quarter in the prior year when both our wire and cable assembly
unit and our power transformer unit posted sales growth in excess of 14%. We
do not believe this slowdown is indicative of a long-term trend and is largely
a result of the industry-wide inventory correction in the global electronics
markets. Despite this general slowdown, our data grade connector sales were
up over 7% from the prior year's quarter, reflecting strength in European
sales and strong demand from a major domestic telecommunications customer. We
also look forward to accelerating revenues from new product releases
throughout the balance of 1998.
"As we reported in May, we were very pleased with the $25.2 million
judgment in connection with our Taylor Publishing unit's lawsuit against
Jostens. However, despite higher sales at Taylor, litigation expenses
associated with the lawsuit, as well as higher than anticipated delivery costs
for spring yearbook production impacted Taylor's second quarter results.
Having concluded the lawsuit, and having completed the multi-year
reengineering at Taylor with significant investments in digital pre-press
technologies, we are optimistic about our ability to compete more effectively
in the future.
"Insilco's second quarter earnings per share were affected by the
substantial merger related expenses. Excluding the impact of this item,
diluted earnings per share in this year's second quarter would have been $0.30
higher.
"We look forward to closing our transaction with DLJ Merchant Banking
shortly after our Special Shareholders Meeting on August 13, 1998, and to
pursuing growth opportunities in our target markets," concluded Smialek.
The statements made in this press release which are not historical facts
may be deemed forward looking statements, and, as such, are subject to certain
risks and uncertainties. It is important to note that results could differ
materially from those projected in such forward-looking statements. Factors
which could cause results to differ materially include, but are not limited to
the following: delays in new product introductions, lack of market acceptance
for new products, changes in demand for the Company's products, changes in
market trends, general competitive pressures from existing and new
competitors, changes in interest rates, failure to consummate the proposed
merger with an affiliate of DLJ Merchant Banking, and adverse economic
conditions which could affect the amount of cash available for debt servicing
and capital investments. Further information concerning factors that could
cause actual results to differ materially from those in the forward looking
statements are contained from time to time in the Company's SEC filings,
including but not limited to the Company's report on Form 10-K/A No. 2 for the
year ended December 31, 1997, Form 10-Q/A No. 1 for the quarter ended March
31, 1998. Copies of these filings may be obtained by contacting the Company
or the SEC.
Insilco Corporation, based in suburban Columbus, Ohio, is a diversified
manufacturer of industrial components and a supplier of specialty
publications. The Company's industrial business units serve the automotive,
electronics, telecommunications and other industrial markets, and its
publishing business serves the school yearbook market. It had revenues in
excess of $500 million in 1997.
INSILCO CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
(Amounts in millions, except per share data)
SECOND QUARTER
Three Months Three Months
Ended Ended
June 30, June 30,
1998 1997
Sales $ 170.0 169.7
Gross profit 49.6 52.2
% of sales 29.2% 30.8%
SG&A 35.4 32.8
Operating income 14.2 19.4
Interest expense, net (6.9) (2.5)
Equity in net income of Thermalex 0.7 0.8
Other income and expense, net 1.4 0.3
Total other income(expense) (4.8) (1.4)
Income before income taxes 9.4 18.0
Income tax expense (5.0) (6.8)
Income tax rate 53.2% 37.8%
Net income 4.4 11.2
Basic earnings per share:
Net income per share $ 1.06 1.16
Weighted average shares outstanding 4.2 9.7
Diluted earnings per share:
Net income per share $ 1.02 1.14
Weighted average shares and share
equivalents outstanding 4.3 9.9
Memo: Depreciation and amortization
expense included in earnings $ 6.4 5.7
Capital Spending $ (5.1) (5.8)
INSILCO CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
(Amounts in millions, except per share data)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Six Six
Months Months
Ended Ended
June 30, June 30
1998 1997
Sales $ 287.3 276.2
Gross profit 78.0 78.2
% of sales 27.1% 28.3%
SG&A 54.0 49.4
Operating income 24.0 28.8
Interest expense, net (13.7) (5.7)
Equity in net income of Thermalex 1.4 1.5
Other income and expense, net 2.0 0.1
Total other income(expense) (10.3) (4.1)
Income from continuing operations
before income taxes 13.7 24.7
Income tax expense (6.5) (9.1)
Income tax rate 47.4% 36.8%
Income from continuing operations 7.2 15.6
Discontinued operations, net of tax:
Income from operations -- 1.1
Gain on Disposal -- 57.8
Income from discontinued operations -- 58.9
Net income $ 7.2 74.5
Basic earnings per share:
Income from continuing operations $ 1.74 1.63
Discontinued operations -- 6.15
Net income per share $ 1.74 7.78
Weighted average shares outstanding 4.1 9.6
Diluted earnings per share:
Income from continuing operations $ 1.69 1.58
Discontinued operations -- 5.97
Net income per share $ 1.69 7.55
Weighted average shares and share
equivalents outstanding 4.3 9.9
Memo: Depreciation and amortization
expense included in earnings $ 10.6 9.6
Capital Spending $ (10.9) (10.3)
Trailing Four Quarter EBITDA $ 65.7 66.5
INSILCO CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In Millions)
Jun. 30, Dec. 31, Jun. 30
1998 1997 1997
Assets
Current assets:
Cash and cash equivalents $ 7.0 10.7 111.2
Receivables, net 88.6 70.7 98.2
Inventories, net 61.9 60.7 57.7
Current portion of deferred taxes -- 0.3 2.2
Prepaid expenses 3.2 2.7 6.6
Total current assets 160.7 145.1 275.9
Property, plant and equipment, net 113.3 114.0 110.4
Goodwill, net 13.1 13.4 13.7
Deferred taxes -- 1.0 4.9
Other assets and deferred charges 27.0 29.2 18.3
Total assets $ 314.1 302.7 423.2
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term debt $ -- 1.7 24.7
Current portion of long-term
obligations 3.5 5.4 5.6
Accrued interest payable 7.1 8.0 1.1
Accounts payable 36.7 39.8 34.8
Accrued expenses and other 49.2 50.6 64.7
Total current liabilities 96.5 105.5 130.9
Long-term debt 264.8 256.1 145.1
Other long-term obligations 43.6 43.4 38.7
Stockholders' equity (deficit) (90.8) (102.3) 108.5
Total liabilities and
stockholders' equity (deficit) $ 314.1 302.7 423.2